The Invercargill City Council has heard, and accepted, it needs to improve its governance oversight of major projects, Chief Executive Clare Hadley says.

Mrs Hadley’s comments come following the key findings of an independent review of the Don Street development.

Council undertook the development of the commercial building between 2014 and 2018.

However Mrs Hadley identified cost-overruns and lack of appropriate reporting to Council in relation to the project in December 2018.

As a result of Mrs Hadley’s report to Council on the matter, Council requested an independent review, which was provided to the Risk and Assurance Committee in late May.

Mrs Hadley said the review’s focus was upon what lessons could be learnt from the Don St development and how it was handled by Council at both a staff and governance level, rather than looking to place blame.

Reviewer Bruce Robertson provided a report to Council which showed that while the development had many good aspects to it, the process which was undertaken had been flawed.The report

identifies four ‘lessons’ from the development process which could advance Council’s governance and management practice:

1. Better reporting for major projects is needed
2. A focus is needed on post-capital development operational requirements and benefits realisation (A focus is needed on the whole of life of an asset)
3. Council should consider the method of ‘delivery’ (and operational management) of such an investment
4. Scope changes need to be justified and ensure they are consistent with Council’s strategic objectives

The report says that while the lessons were high-level, the absence of attention to those matters resulted in the problems that occurred as the development proceeded.

“Council needs to fundamentally rethink its approach to major projects – especially those involving commercial objectives – and which it proposes to pursue outside normal ICC capital development processes,” the report says.

“Once the project was commenced, there appears to have been very poor formal communication to Council. However, collectively, elected members have to ask themselves did they ask the right questions.”

Mrs Hadley said Councillors had considered the report and accepted it. “They were keen to ensure Mr Robertson’s reference to the Auditor General’s ‘powerful questions’ was something that they brought into their decisionmaking process from now,” she said. “There are lessons here which Councillors also wanted to keep at the forefront of their minds when considering Council’s proposed involvement in the city block redevelopment.”

Review of 20 Don St Commercial Development